All eyes are on the FED
This week the Fed is meeting and markets will be watching. The expectation among analysts is that a rate hike will be on tap for September.
There is no rate hike expected after this meeting since there is no press conference.
The Fed meets 8 times throughout the year but only 4 have press conferences. It is within the Fed's power to raise interest rates without a press conference yet it never has.
Many point to the fact that inflation is nearing the Fed's 2% target along with a strong growing economy as the reasons why the Fed will move rates higher.
Fed Chairman Jerome Powell has promised that next year will have 8 meetings, all with press conferences afterwards. This is welcomed by analysts. Even though the Fed does issue statements after every meeting, there are often subtle nuances that are not contained in the statement.
For the past year, the Fed has engaged in gradual tightening. In addition to raising interest rates, it is slowly unwinding the balance sheet. This was not an unexpected move since the Fed went on a buying spree after the economic collapse last time in an effort to insert liquidity into the markets.
Now that the situation improved greatly, the Fed is trying to put itself in a better position to handle the next crisis. Their moves are tempered by the fact that while some of the numbers about the economy are very encouraging, there are still headwinds. Wages, for example, are relatively flat over the past decade showing the progress was not distributed to all.
It is believed that the Fed is going to keep progressing to the 3% rate before re-evaluating how things stand. This could be considered a point of neutrality.
Rate, though, are still at historic lows. Both the equities and real estate markets watch the rates very closely. The Fed still wields enormous power over the economy. In spite of some of the other events lke North Korea and a trade war, the Fed is still the big elephany in the rooom.
They meet on Monday and Tuesday with the statement being issued on Wednesday afternoon. Trading is often lighter than usual ahead of the Fed statement.
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It will continue to inch up as the economy continues to strengthen.
Following! Hep, bought of f150 truck friday because I fear a rate increase.
when they do raise it they will only put it up a quarter of a point, it won't make a huge difference but it is wise if people are planning to do any borrowing to do it sooner rather than later.
I think they want to get to 3% before the next recession. They are low on financial ammunition otherwise.
yup, hard to cut rates to stimulate a weak economy if you don't raise them during a strong one. Some countries not too long ago actually had negative interest rates.
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That means FED tries to tighten its monetary policy to control inflation...by increasing rates...
But is there any adverse effect on the world's economy or not????
There can be. They raise interest rates too much it puts a boot to the throat of the economy.
not doing so would have an adverse effect.
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